Drewry: L.A./Long Beach Q4 delays cost carriers $150M

Shipping lines collectively lost around $150 million in the fourth quarter of 2014 due to U.S. West Coast congestion, according to Drewry Maritime Research. In the most recent issue of Container Insight, researchers note that carriers experienced various levels of disruption from the port labor dispute, and attempted to quantify the losses by examining available data.

According to the report, APL is the only carrier that provided a set figure representing the extra costs it accrued due to U.S. West Coast congestion in Q4, although it is vague about the details. NOL/APL said that the port delays added $15 million to the company’s liner division core EBIT loss in the last three months of 2014.

To quantify the extra costs, Drewry mined data from the Marine Exchange of Southern California. They found the average vessel turnaround time at LA/LB during 4Q14 was 126 hours, or 5.25 days, meaning the average ship turnaround time had doubled since August.

Around 55 percent of all containerships calling at LA/LB in Q4 of 2014 were turned around in 5 days or fewer, while 13 percent of ships stayed for 10 days or more. The 10,000-TEU CSCL East China Sea had the longest stay, waiting a whopping 32 days to depart after its arrival on 21 December. Inevitably, ships that were anchored ended up with the longest turnaround times. Out of the 51 ships that were resident for 10 days or more, 45 had been anchored outside port.

APL was actually one of the least affected by vessel anchorage and long delays, the researchers note, while OOCL, CSCL, NYK and Hanjin took more than their fair share of the pain.

In terms of turnaround times, APL also came out on top, with OOCL coming in last. Drewry reckons it would have taken just under four days to turn around a 6,086-TEU APL ship in the fourth quarter, but if that same ship belonged to OOCL it would have taken just over 8 days. The researchers said nine of the ten carriers (Horizon Lines was the exception) with the fastest implied Q4 turnaround time had some form of interest in a terminal within the LA/LB complex.

Drewry says more carriers should come up with actual numbers to quantify their extra outlay due to West Coast delays, since greater transparency would increase their chances of recovering the extra costs from their customers. “They are clearly hurting, but the failed blanket $1,000 surcharge at the end of last year was self-defeating as it looked like an ill-thought out revenue generating scheme.”

Even though USWC port labor contract has seemingly been resolved, Drewry asserts that carriers will continue to accrue costs through the first quarter of 2015 at least. The number of ships anchored outside LA/LB was worse in the first two months of 2015 so the cost to the industry will be larger than the fourth quarter bill. The analysts conclude that carriers should be more open with the associated costs, especially as many customers will think the issue has now been resolved.

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